A new framework can help IT executives develop capabilities and demonstrate value.

The Innovation Value Institute of the National University of Ireland (NUI), Maynooth—a consortium with members that include heavyweights in business and academia—has unveiled a management road map designed to optimize business value derived from IT investments. The purpose of the IVI’s IT Capability Maturity Framework (IT-CMF) is to provide an end-to-end integrated framework to help IT executives manage the challenges of developing their organizations’ technology capabilities while delivering demonstrable value.

“Companies typically invest 1 percent to 5 percent of revenue in IT, but without a way to measure and maximize the return from these investments, their IT organizations cannot move from cost centers to value centers,” Martin Curley, adjunct professor of technology and business at NUI, Maynooth, and global director of IT innovation at Intel, said during a presentation.

Although optimizing the value of IT is a top priority in today’s tough economy, there has been no comprehensive, standardized framework for making investment decisions. Aiming to address this problem, the IVI has been developing and testing ways to align IT investment with business results.

Formed in 2006, the consortium has more than 30 members—including The Boston Consulting Group, BP, Chevron, Ernst & Young, Intel, Microsoft and SAP—and it’s growing.

“Now is a perfect time to release the IT-CMF,” Sheila Upton, director of technology and security risk services at Ernst & Young and an IVI board member, tells Baseline. “The importance of deriving value doesn’t go away because you’re under cost pressure.”

In fact, she adds, the downturn has created an unprecedented situation. “A number of organizations that are not in a bad situation want to come out of the downturn in a good position,” Upton explains. “So they need to be innovative.”

The IT-CMF provides a five-stage maturity model that can be used as a framework for mapping out IT improvements. It consists of four macroprocesses:

1. Managing IT like a business: shifting the focus from technology and production to customers and services

2. Managing the IT budget: investing in innovative IT solutions that deliver better value and performance for the business

3. Managing the IT capability: managing IT assets throughout the value chain and developing core competencies

4. Managing IT for business value: connecting IT investments to overall business benefits.

The IT-CMF identifies 36 processes covering all activities in an IT department and categorizes them under these four macroprocesses. An assessment of an IT organization’s maturity across these 36 processes—along with comparisons with industry benchmarks and best practices—will identify a company’s maturity gaps, as well as opportunities for value creation, the IVI says.

To date, about 250 CIOs and IT executives have taken IVI training courses, and the consortium is planning about 50 pilot programs in 2009.

“Piloting helps make sure you have the right content and confirms whether the framework is right,” Upton says. “Companies that have begun testing the frame have seen immediate value.”

Intel began testing the IT-CMF in 2007 and, as a result, it has a better way of measuring its performance and identifying where it should be, Intel CIO Diane Bryant said at the presentation.

“The IT-CMF provides a holistic view of how CIOs set priorities, reduce complexity and frame decisions based on business value so that they are optimized for the company, not IT,” Bryant explained. She added that by sharing their collective knowledge, companies will be better able to solve their structural problems.

The IVI estimates that data showing returns on investment for IVI members will be available by 2010, once pilot study recommendations have been implemented and studied.